Unit 1 Flashcards
(26 cards)
Sole Proprietorship
Advantages: be your own boss, claim all profit, easy to start
Disadvantages: responsible for all aspects of your business, unlimited liability (debt), MOST difficult to raise revenue
Partnership - 2+ people
Advantages: easy to start, share business responsibility, pool their resources/knowledge
Disadvantages: relatively difficult to raise revenue, unlimited liability (extended to partner(s) as well), harder to reach decisions
General Partnership
One in which the partners share equal in both responsibility/liability
Limited (Silent) Partnership
Limited partner(s) and general partner(s)
A limited partner: no company involvement, limited liability, no daily responsibilities
Limited Liability
legal status in which a person’s financial liability is limited to a fixed sum
protects its owners from being personally pursued for debt. popular in medical field
Corporations
Treated by the law as an individual but is owned by stockholders
Able to: acquire resources, produce/sell products, incur debts, sell bonds, sue/be sued, separate from stockholders
Stocks
Part ownership in a corporation. Bonds are safer than stocks
Percentage of firms
Sole Proprietorship -> Partnership -> Corporation
Percentage of sales
Corporations -> partnerships -> sole proprietorship
Franchise
An entrepreneur pays a fee to the “parent company” for the right to sell said company’s products
Usually fast food
Horizontal merger (COMPETITION IN SAME MARKET)
2 or more firms competing in the same market
Ex: McDonald’s purchases Wendy’s
Vertical merger (PRODUCTION)
2 or more firms involved in the production of the same product
Ex: McDonald’s buys the trucking company that delivers its meat and buns
Conglomerate
When firms buy other firms that make unrelated products
Ex: ice cream company buys steel company
Levels of competition
Pure/perfect competition
All sellers produce the same product, sellers do not differentiate their product/price
Easy to enter/exit
Monopolistic competition
Sellers try to differentiate same products but try to differentiate this product through ads (monopolistic aspect)
Easy to enter/exit (competition aspect)
Oligopoly
Market dominated by a few large producers (they control 75% or more of a market)
Ex: animation studio, breakfast cereal, automobile industry
Pure Monopoly
Single seller.. the firm IS the industry
Total control over price and output (restrained by the law of demand)
Entry to this market is not possible
Ex: Microsoft
Natural monopolies
market that runs most efficiently with ONLY one large firm (ex: public water/sewage)
NYSE
largest stock exchange in the world located on wall st nyc
Blue chip is…
A company with high performing stock
Negative info stays in your credit card for…
7 years
Homeowners insurance is great 😃 but it doesn’t cover what..?
does not cover floods! need renters insurance if renting
You should save ___ of your income
10%
Fixed costs are…
costs that don’t change from month to month
